12 personal risks affected by the crisis

In the past two weeks, listed insurance companies have issued semi-annual reports, exposing the "tragic" side of individual insurance channels in the domestic life insurance industry.

According to the semi-annual reports of these companies, the number of individual insurance agents of China Life Insurance, Ping An Life Insurance Company of China, Pacific Insurance, Xinhua Life Insurance, Taiping Life Insurance and PICC Life Insurance increased by -32.0%, -23.4%,-16.3%,-16.2% and16.2 respectively. Judging from the new business value of individual insurance, the situation is similar, with year-on-year growth rates of -20.8%,-14.5%, -8.9% (life insurance companies as a whole), -24.22%, 6.92% and -26.27% respectively.

These six listed life insurance companies are well-deserved individual insurance companies in the domestic life insurance industry, and their trends have basically represented the overall situation of the whole industry. So what happened to the individual insurance channels in the domestic life insurance industry, and why did they fall into such a dilemma? Looking around other markets, what can we learn from them?

Reason 1: It is difficult to increase the number of employees, and the number of new agents has dropped significantly.

In the past seven or eight years, the individual insurance channels of life insurance companies have been able to recruit about 5 million salesmen every year. Since the 1990s, there should be 70-80 million insurance salesmen, at least 40-50 million. Ordinary people already know that it is difficult to sell an insurance product, and most people can't support themselves, so now insurance companies can't compete with Internet companies that can make money (take-out, Didi taxi) for manpower. As an insurance agent, the probability of success is very low. After five years, the retention rate is only 5%, and the activity rate is even lower after five years. As long as you are diligent, you will have a high probability of success and your income will be higher than the social average.

In the past three years, the number of employees has grown slowly, only 5% in 20 18, 16% in 20 19 and 13% in 2020. In the first half of 2020, the epidemic was the most serious, with a year-on-year decline of only 5%. However, by the first half of 20021,the number of employees in the whole industry had dropped by 49% (excluding China Life Insurance and AIA), which was an astonishing decline, and the number of employees in many foreign-funded companies also dropped significantly. Compared with the first half of 20 18, the number of employees in the whole industry decreased by 59%, and there is no sign of rebound.

As can be seen from the latest data of peer exchanges, it is more difficult to increase employees in July.

The second reason: the quality of recruitment has generally declined, and it is urgent to increase the training of newcomers.

The decrease in the number of employees is not caused by the company's raising the recruitment standard, although many companies claim to build a high-quality sales team.

In the past four years, the quality index of recruitment has been declining. Although the retention rate remained basically stable in recent four years1March, the activity rate of most companies generally declined. Last year, due to the COVID-19 epidemic, most companies relaxed the assessment and clearance of agents, and the retention rate in1March rebounded slightly.

It is estimated that the quality of newcomers in most companies has become lower and lower in recent years. Of course, the quality of these newcomers may not be lower than in previous years, or it may be because life insurance products are becoming more and more difficult to sell. If insurance companies strengthen the training of newcomers, the quality of new agents will naturally improve.

Reason three: the company can't get the bonus in the background, and the work enthusiasm drops.

From 2065438+04 to 2065438+07, the standard insurance of individual insurance increased by more than 30% every year, most companies exceeded their annual plans, and the bonus for individual insurance office was the highest in the company. The total bonus of heads of institutions at all levels and individual insurance managers often exceeds the basic salary.

However, from 20 18, few companies can complete the annual plan of individual insurance (some companies use NBV for assessment), because most companies are negative growth, and the annual goal is always positive growth. If you can't finish the task, there is basically no year-end award, or if you finish more than 80%, there will be a little consolation prize, which is too different from previous years.

Since last year, the general feeling of office workers in most companies is that no matter how hard they and their colleagues work, they can't finish their annual tasks, which seriously dampened their enthusiasm for work.

It is suggested that life insurance companies should be realistic when setting their mission targets for next year, and it is good for most companies to achieve zero growth. The conditions for issuing year-end awards also need to be revised. Even if the annual target cannot be achieved and the achievement rate is among the best in the organization, incentives should be given, otherwise the company will lose more. At present, most of the company's incentive schemes are aimed at agents, but the effect is gradually decreasing, and arbitrage may even occur.

Reason 4: Millions of medical care, benefiting the people and ensuring great development, and short-term medical insurance partially replaces critical illness insurance.

More than 200 million people in China have bought critical illness insurance, with an average coverage of 654.38+0.7 million, and the annual premium is more than 4,000 yuan, mainly for 20 years. Critical illness insurance used to be just needed and standard for the middle class in China, but since 20 14, the life insurance industry has introduced 100 yuan medical insurance, and later many property insurance companies also participated. Now the annual premium is about 30 billion, and the average premium is about 500 yuan (ranging from 200 to 1000 yuan according to different ages). It is estimated that 670 million people are insured every year, which has solved these customers' worries about the cost of serious illness treatment.

In the past two or three years, many provincial and municipal governments have cooperated with insurance companies to launch "medical insurance" products with lower prices. Although the coverage is poor, most of them also include self-funded drugs other than social security, and the deductible is higher than one million, but the annual premium is only one or two hundred yuan. The popularity of this product has reduced the demand for payment-based critical illness insurance. After all, the price is too cheap. Compared with the social security medical system in developed countries in Europe and America, it basically covers all the medical expenses of critical illness, so there is no market for critical illness insurance at all.

In addition, due to the new definition of critical illness insurance, the old critical illness insurance was discontinued in February this year, so in June, more than 30 billion critical illness insurance was sold in each insurance channel, and the overall standard insurance increased by 40% year-on-year, which was entirely contributed by critical illness insurance. Due to the higher critical illness insurance in payout ratio in recent years, the new critical illness insurance is generally more expensive than the old critical illness insurance, and thyroid cancer can only be paid as a mild illness, which some customers think is not cost-effective. Therefore, the sales volume of critical illness insurance after February dropped significantly compared with the same period of last year, and it is estimated that it will gradually return to normal next year, and the proportion of new single-standard insurance is close to 20 19.

Reason 5: The pricing interest rate of annuity insurance is reduced, and the attractiveness of products is reduced.

During the opening period of 20 18, the quick return annuity insurance was discontinued in the fourth quarter of 20 17, resulting in a sharp decline of 30% in the first quarter of individual insurance channel standard insurance, but it still rebounded slightly in the next three quarters. The quick return annuity insurance is the hardest hit by misleading sales, which does not conform to the normal insurance principle. The annuity products under the new regulations will not be returned until five years at the earliest.

At the end of 20 19, the regulatory authorities basically stopped approving new products priced at 4.025%, and asked most companies (companies with low capital adequacy ratio) to stop selling such products as soon as possible. By the beginning of 2020, 4%-priced annuity insurance will basically disappear from the market. Among the products of listed companies, such products account for a relatively low proportion and are less affected; But it has a great influence on many radical small and medium-sized companies. Their customers feel that the income of new products is obviously not as good as that of old products, and the settlement interest rate of additional universal insurance is not guaranteed. Since 20021,the regulatory limit of universal insurance settlement interest rate cannot exceed 5%, and the attraction of product interest demonstration naturally declines.

The current interest rate in China has dropped significantly compared with five years ago, and there is a considerable risk of further decline in the future. If interest rates continue to fall, there will be fewer and fewer traditional insurance products priced at 3.5% in the future, and the whole industry may return to traditional insurance and dividend insurance priced at 2.5% before the fee reform.

Reason 6: The transformation of bancassurance channels and the rapid growth of long-term delivery products have intensified customer competition in individual insurance channels.

The bancassurance channel began to change from selling wholesale products to selling futures products.

10 years ago, the main products delivered were short-term insurance, such as products with three guarantees, six guarantees and ten guarantees. From 20 17, the bancassurance channel began to shift to long-term delivery products. 20 17 years bancassurance channel futures premium160 billion, it is estimated that forward futures products only account for about 40%, about 60 billion. By 20 19, the premium of forward delivery has risen to 230 billion, with forward delivery accounting for 58%, about130 billion. However, at that time, it mainly sold 4.025% annuity insurance, and the new business value was low.

In 2020, affected by the COVID-19 epidemic, the opening of bank outlets was limited in the first quarter, but the forward premium still increased by 1% throughout the year, and the forward premium also increased slightly, from13 billion to14 billion. In addition, the main long-term delivery products of the bancassurance channel changed from 4.025% annuity to 3.5% lifelong increase, and the value rate of new business increased greatly.

In the first half of 20021,the forward premium of bancassurance only increased by 13%, but the long-term forward premium increased by 62%, and the proportion increased from 6 1% to 8 1%. Only a few companies are still selling short-term and long-term products with three guarantees and six guarantees, and the guarantee period is 10 to 20 years.

Banks have a natural advantage in selling insurance. Some customers have outlets, and customers have a high degree of trust in banks. In the European market, the bancassurance channel accounts for two-thirds of the market share of life insurance industry. At present, listed companies rarely sell products that increase life in individual insurance. However, due to its high cash value, there is no uncertainty of additional universal insurance, which is more attractive to some customers. Once a potential customer buys insurance from a bank, the possibility of buying insurance from an agent is reduced.

The products of bancassurance are mainly delivered in five years and three years, and the discount coefficient should be around 0.45. It is estimated that the long-term premium of bancassurance will reach 2 100 billion this year, with a discount of 94.5 billion. This year, the individual insurance will be around 198 billion, equivalent to 48% of the individual insurance, and it is likely to exceed the individual insurance after two years. In addition, there are 20-30 billion short-term delivery products in the individual standard insurance. If only compared with long-term delivery products, bancassurance is equivalent to 55% of individual insurance channels.

Among the long-term premiums paid by the bancassurance channel, the increase in life expectancy accounts for about 80%. A few small and medium-sized companies have increased their life span in the sales of bancassurance. After five or six years, the price is higher now. If the customer surrenders, the simple interest can reach 2%.

For example, products delivered in five years are surrendered in the sixth year. Because the total cost of products is between 40% and 50%, the capital cost ratio of insurance companies is between 3.9% and 4.4%, which is still lower than products delivered in five years or products delivered with three guarantees and six guarantees. Of course, if the customer surrenders after six years, because the current price is greater than the accounting reserve, accounting losses will occur in that year, and the actual capital brought by the policy will disappear.

On the other hand, if the interest rate continues to drop in the future, it will be beneficial for the company to increase the number of years of surrender after 6 years, which can reduce the risk of long-term mismatch of the company's assets and liabilities and reduce the future spread loss. This is a paradox.

In addition, if the debt evaluation curve moves down, especially the final interest rate and EV evaluation interest rate are lowered from the current 4.5% to below 3.5%, then the new business value and residual margin of the increased life insurance (and most long-term insurance products priced at 3.5%) will become a bubble.

Reason 7: The consumption habits of the younger generation of customers have changed, and they prefer online insurance, but the proportion of existing young agents is relatively low.

As we all know, what kind of agents there are, what kind of customers there are, which is determined by the life circle of agents, even if most customers are not directly known by agents. Now the salesmen are aging, and the proportion of salesmen under 40 is relatively low (the agents of foreign-funded companies are relatively young), so it is difficult to reach the post-80 s customers under 40. After 80s, I am very familiar with purchasing physical goods and financial service products online. However, insurance products, especially long-term insurance, are more complicated, and it is difficult for ordinary people to choose products that suit them.

At present, the best-selling insurance products on the Internet are short-term insurance, such as aviation insurance, millions of medical care and fixed-life products with lower pricing. At present, the sales of other products on the Internet are very low, and the market share should be less than 1%. At present, the internet business of industry statistics is mainly the self-service terminal and pocket banking business of bancassurance channel, not the real online sales of active purchase.

When the insurance needs of the younger generation are not met, the capacity of the whole market becomes smaller. Of course, this is a process of slow change.

Reason 8: With the rise of agency companies, high direct commission has aggravated the phenomenon of agency job-hopping and flying orders.

In 20 17, the premium of agency channel futures was only 9.8 billion, which was about 1 10 billion in the first half of this year, and it is expected to be about 20 billion in the whole year. The products sold by the agency are mainly delivered in 10 and 20 years, with a discount of about 0.85. Compared with the universal insurance of individual insurance agent channel, it only accounted for 2.5% in 20 17, and it has risen to 9% this year, becoming a competitive channel that cannot be ignored.

The agency company is characterized by high direct commission of products, which is between 1.5 times and twice that of life insurance companies. Sales experts who don't have much organizational interest in life insurance companies are very attractive, so many agents join the agency, which is the main strategy of the agency's human development, rather than cultivating excellent salesmen themselves. What's more, there are a few agents who don't jump ship, but they will "fly" large orders to the agency to get higher commissions.

From 20 17 to 202 1, the new single premium of agency channel is expected to increase by 100%, while the standard premium of individual insurance agent is expected to decrease by 4 1%. It can be seen that agency companies have stronger competitiveness and vitality than exclusive agents of insurance companies in the current environment.

Reason 9: Some companies are eager for quick success in the short term, which brings long-term negative effects: the effect of radical products is decreasing and arbitrage is prominent.

During the opening period of 20 19, in order to maintain its position in the industry, a company introduced short-term products with an insurance period of only 15 or even 10 years, such as paying three guarantees and ten guarantees or paying five guarantees for fifteen years. The new business value of these products is low, which is more like short-term savings products sold by bancassurance channels. However, due to the short guarantee period and payment period, the average monthly premium after discount is also quite high. In order to encourage salesmen to sell, the commission level is even similar to the annuity insurance of three guarantees for life. By the beginning of this year, all listed life insurance companies had launched similar products, and some even launched products with three guarantees, eight guarantees and seven guarantees. There is an upper limit on the total sales of these products, which are usually only sold in the first quarter.

If we look at the individual insurance standard in the first quarter of this year, the effect is still very obvious. Most houses showed positive growth year-on-year. Of course, the suspension of the sale of critical illness insurance also contributed.

A few foreign companies actually sell short-term savings products, while small and medium-sized companies do not sell such short-term delivery products because of the large capital consumption.

In the long run, selling these short-term products is unfavorable to salesmen and companies, and some salesmen will lose their ability to sell long-term guaranteed products. For life insurance companies, it is more like opium. Once you start, it is difficult to stop unless you pay a higher price. If you continue to sell, the effect will be reduced every year. In the first quarter of this year, the standard guarantee of two listed companies dropped sharply year-on-year, which has verified that the effect is decreasing.

In order to increase the income of sales staff, many companies have revised the basic insurance law. In addition, some small and medium-sized companies also have phased incentive plans and various recruitment plans, but if they are not properly designed, they will bring arbitrage opportunities to salesmen (especially supervisors at all levels). The premium paid this year will disappear with the insurance policy next year, causing losses to the company. The policy renewal rate of a listed company has dropped below 40% this year1March, which is mainly caused by the agent's partial arbitrage through self-insurance and then surrender.

Let's take another extreme example. A few years ago, a new company with particularly strong capital spent hundreds of millions of RMB to recruit. Now, its business platform has fallen sharply for two consecutive years. In the first half of this year, the negative growth of standard insurance was 55%, ranking first in the industry, and the policy renewal rate of 13 months also fell below 60%.

Reason 10: The COVID-19 epidemic has brought down residents' income, and the old customers' willingness to increase insurance is getting lower and lower.

Most of China's labor force is employed in private enterprises, and many of them even belong to the category of "flexible employment". The COVID-19 epidemic has a great impact on their income, reducing their willingness and ability to buy insurance. In 2020, the renewal rate of most companies' policies in1March decreased, which proves from another angle that the financial situation of insurance customers is deteriorating and the old customers' willingness to increase insurance is getting lower and lower.

In the past decade or so, rapid economic growth has brought about a substantial increase in residents' income, and also generated more insurance demand, and some savings have been converted into premiums. In the future, the growth rate of income will slow down, but the renewal premium of existing policies in the whole industry is still increasing, which puts great pressure on new sales.

Reason 1 1: the cancellation of automatic renewal of short-term additional insurance has caused triple pressure: the workload of the company has increased, the sales willingness of agents has decreased, and some customers cannot continue to apply for insurance.

This year's new regulatory regulations, short-term additional insurance can not be automatically renewed, resulting in three problems. First, it brings more workload to the back office of the company, and the core business system needs to be transformed; Second, agents have no incentive to sell short-term insurance repeatedly every year, because the annual premium is only tens or hundreds of yuan, and the commission is only tens or even tens of yuan. It is not easy to find old customers to buy short-term insurance every year; Third, some customers are dissatisfied, and it is too troublesome to insure again every year, while some customers cannot continue to insure because of changes in their physical condition.

In addition, this year's automatic renewal of millions of medical insurance sales also caused some customers' dissatisfaction. In many companies, the premium of existing customers accounts for about half of the new single premium, and their satisfaction is very important.

Reason 12: compliance and double recording requirements have been improved, which will benefit the development of the industry for a long time.

In recent years, the regulatory authorities have increased the management and punishment of misleading sales, which will affect a small number of consumers to buy insurance products in the short term and benefit the healthy development of the industry in the long run.

Since 20 17, the regulatory requirements for customers over 60 years old to purchase insurance have been double-recorded. In the past two days, Jiangsu, Shanghai and several cities have required double recording of all individual insurance customers, which has increased the sales difficulty to some extent.

Although the performance of individual insurance channels has continued to decline in the past three years, the marketing models of most companies have not changed significantly, and many companies are still exploring. In the first half of this year, the number of employees in the industry decreased by almost 50% year-on-year, and standard insurance decreased by 38% year-on-year in the second quarter. Many people suspect that the existing marketing model seems to have come to an end, but no one can see the direction of future industry reform. This paper draws lessons from foreign experience and puts forward some preliminary ideas.

Learn from the Asian model and realize the transformation from sea tactics to "elite system"

Chinese mainland's personal agency system is an East Asian model introduced from Taiwan Province and Japan. In the past 20 years, both Taiwan Province Province and South Korea have experienced the transformation from sea tactics to "elite system".

Korean life insurance market: According to the industry data of 20 19, the five-year retention rate of individual agents has reached 35%, while the1March retention rate in China will only be 32% in 2020 (it will be less than 30% this year due to liquidation). At present, the five-year retention rate of life insurance agents in China is only 5%, which is the result of China's tactics. 20 14 After the cancellation of the agent qualification examination, the threshold for being a life insurance salesman dropped even lower. From 20 14 to 20 17, the number of employees has increased significantly, which on the one hand contributed fresh blood to the industry growth in those years, and on the other hand laid the groundwork for the current dilemma of increasing staff.

In the last three years, the companies with increased insurance coverage are mainly several foreign-funded companies, and there are also several newly established companies with expanded institutions. The recruitment quality of foreign companies is generally higher than that of Chinese companies. Although the retention rate of foreign-funded companies 13 is similar to that of the industry, the activity rate obviously exceeds the industry average because of strict assessment. If the five-year retention rate of agents in China can rise to 15% within 10 years, the exclusive agent channel in China can maintain its vitality.

Take South Korea's Samsung Life Insurance as an example. Before 1999, it was still a traditional agency model in Korea, with women accounting for 95%, mainly housewives and part-time salesmen. After the Asian financial crisis, many foreign companies entered the Korean market, among which the high-end agent system in metropolis was the most successful, with 4 to 6 pieces per person per month, and the activity rate was almost 100%.

Since 2000, Samsung Life has opened up new marketing channels. Salespeople are called FC (financial consultants), all of whom are college graduates, and most of them are men. After several years of development, FC channel has achieved great success, with a total number of 3,000 to 4,000 people, and its production capacity is obviously higher than that of traditional agents. However, the success of FC has also caused other companies in the same industry to dig corners, and the number of people has shown a downward trend in recent years. At the same time, Samsung's traditional agency team has dropped from more than 60,000 to more than 30,000, but its per capita production capacity and income are increasing.

If a company wants to open up new sales channels, it must first deal with the contradictions and conflicts with the existing agency team, otherwise it will bring greater losses to the company, which is why most companies dare not act rashly at present.

Life Insurance Market in Taiwan Province Province: In recent 20 years, the insurance depth of Taiwan Province Province has been ranked first in the world, among which the depth of life insurance premium is far ahead, reaching 15% of GDP, while that of Chinese mainland last year was only 3.8% (including universal insurance premium). There are 330,000 employees in the life insurance industry in Taiwan Province Province, accounting for 1.4% of the total population. At present, the income level of life insurance salesmen in Taiwan Province Province is quite attractive, but to become insurance agents, they must pass strict professional examinations, and the passing rate is less than 20%.

In recent 20 years, the life insurance sales channels in Taiwan Province Province have also undergone major changes. The market share of exclusive agents of life insurance companies is declining, from 65% to 35%. The market share of agency companies has been rising, and now it has surpassed the market share of exclusive agents, which is about 40%. The remaining 25% comes from direct sales, online sales and bancassurance channels.

Drawing lessons from American life insurance market model to develop independent agents.

The independent agency model in the United States is called MGA (Management Agency), which is similar to the agency company in China, but it is usually small in scale. A company usually has only a dozen people or dozens of people. At present, the market share of independent agents in the United States has accounted for half of the sales channels, and only large-scale life insurance companies such as NorthwesternMutual and NewYorkLife have their own agents.

Independent agents in the United States are characterized by their age and high income, with an average income of about $70,000, which exceeds the social average. Seven percent of the agents earn more than 200,000 yuan, and the highest income is the salesman aged 60-65, with a five-year retention rate as high as 25%.

China's independent agent system has begun to get on the right track. Since the CBRC issued the Measures for the Trial Administration of Independent Agents in 2020, Renren Life Insurance and Xintai Life Insurance have landed, and Soochow Life Insurance and Evergrande Life Insurance have issued the Basic Law on Independent Agents, which will be launched soon.

An independent agent in China must belong to a life insurance company. To put it bluntly, this new channel is very similar to an agency that only sells its own products. It takes time and practice to prove whether it has a competitive advantage compared with traditional agency companies.

In addition, life insurance companies with strong financial strength can consider acquiring existing life insurance institutions.

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